YOU have turned 62. Short of funds for your golden years, you want to cash in on the value — currently $170,000 on the market — of the three-room flat you have been staying in all your life.
Soon, a new scheme by the Housing and Development Board (HDB) will let an estimated 25,000 asset-rich but cash-poor homeowners like you monetise your dearest asset, without you having to move out.
What’s more, the Government will even give you a grant as an incentive to do so.
As announced by Prime Minister Lee Hsien Loong two weeks ago, eligible elderly and lower-income Singaporeans will be able to sell back the remaining years on the lease of their flat to the HDB, in return for lump-sum and monthly payouts.
Giving more details of the Lease Buyback Scheme on Friday, Minister for National Development Mah Bow Tan said the equity release “will be based on the market value of the flat”.
On top of the cash value of the flat, the Government will add a grant. The total amount will translate into three stages of payment to the elderly owner-lessee.
Take a flat with 70 years left on its lease, said Mr Mah — the HDB will leave the resident with 30 years and buy back the rest.
The first payout will be as an upfront lump sum, followed by monthly payments for the next 30 years.
If the resident dies before the end of this term, the balance of the sum goes to his or her family.
But should the resident outlive the payment period, a longevity insurance — paid for out of the total amount — will kick in.
Said Mr Mah: “We want to make sure that when the flat lessee reaches a certain age, they can still live in a flat and have some money.”
And unlike reverse mortgages, which only give one stream of payout, this scheme has three, he pointed out.
Details of the Government subsidy and the structure of the payouts are being worked out and will be unveiled in next year’s Budget, said Mr Mah.
“We are hoping to tie up with CPF so that when they finalise the longevity insurance, which we are now working on, we can ride on (that) part,” he added.
Each payout stream would be “balanced”. As for how much the monthly payouts were likely to be, Mr Mah pointed to the CPF minimum sum draw-down, which is about $250. “If we take that as a ballpark figure, we should be talking about something a bit more than that,” he said.
Mr Mah, who was speaking at the launch of the Remaking our Heartland exhibition, also called on Singaporeans to give their feedback on what they want to see in the remaking of their HDB estates. The exhibition is on at the Toa Payoh Hub until Sept 8.
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